Rutland, Vermont-based Casella Waste Systems Inc., a regional solid waste, recycling and resource management services company, has reported revenue increases in the fourth quarter of 2017 and for the full year, which ended Dec. 31, 2017. In its 2018 guidance, Casella Waste predicts further revenue gains.

For the fourth quarter and full year, Casella has reported:

revenue of $151.2 million, up $7.4 million, or 5.2 percent, from the same period in 2016 and revenue of $599.3 million, up $34.3 million, or 6.1 percent, from fiscal 2016;

net income of $20 million as compared with a net loss of $12 million for the same period in 2016 and a net loss of $21.8 million compared with a net loss $(6.9) million in fiscal 2016;

adjusted net income attributable to common stockholders of $4.6 million compared with $1.9 million for the same period in 2016 and $28.7 million compared with $7.8 million in fiscal 2016;

adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $30.2 million, up $800,000, or 2.8 percent, from the same period in 2016 and $129 million, an increase of $8.4 million, or 7 percent, from fiscal 2016;

net cash provided by operating activities of $107.5 million for the fiscal year, up $27.1 million, or 33.7 percent, from fiscal 2016; and

normalized free cash flow of $38.8 million for the fiscal year, up $11.7 million, or 43.1 percent, from fiscal 2016.

"We had a strong operational quarter and a great year, as we continued to execute well against our key strategies," says John W. Casella, chairman and CEO of Casella Waste Systems. "We remain focused on creating shareholder value through increasing landfill returns, improving collection profitability, creating incremental value through resource solutions, driving general and administrative efficiencies and strong capital discipline."

He adds that the progress the company has made is visible in Casella Waste’s financial results in the fourth quarter. "Our disciplined solid waste pricing programs continued to add value, with landfill pricing up 3.6 percent and collection pricing up 3.7 percent. This strong pricing was coupled with 2 percent solid waste volume growth, mainly driven by 4.8 percent growth in landfill volumes as we continued to source new volumes in the tightening northeastern disposal markets and 1.2 percent solid waste revenue growth from acquisitions."

Casella says the company has set a goal to grow revenue by $20 million to $40 million per year through acquisition or development activity for the next three years. “We are off to a great start with this strategy, with roughly $18 million of acquired revenues over the last two months. During the fourth quarter, we completed a small tuck-in hauling acquisition, and in early January 2018 we completed the acquisition of an integrated solid waste company in western Massachusetts that provides us with a new market entrance and a strategic truck- and rail-served transfer station that will enable us to direct additional waste volumes to our landfills in New York and Pennsylvania,” he says. “Our acquisition pipeline remains robust, and we believe that investing a portion of our excess cash flows to grow our business will create additional shareholder returns through higher cash flow growth rates driven by new revenue streams, internalization to our disposal facilities and cost synergies."

Revenue growth in the fourth quarter was driven primarily by robust collection and disposal pricing, strong solid waste volumes, the roll-over impact from acquisitions and higher volumes in the customer solutions line-of-business, partially offset by lower recycling commodity pricing and volumes, the company says.

Net income attributable to common stockholders was $20 million, or 46 cents per diluted common share, an increase of $32 million for the fourth quarter as compared with net loss attributable to common stockholders of $12 million, or 29 cents per diluted common share, for the same period in 2016.

Operating income was $9.9 million for the fourth quarter, down $100,000 from the same period in 2016, whereas adjusted operating income was $10.3 million for the fourth quarter, down $600,000 from the same period in 2016.

"During the fourth quarter, operating income was down approximately $2 million year over year in our recycling business," Casella says. "This decline was mainly driven by China's National Sword program, which imposed strict new contamination standards for recycled commodities and significantly reduced global demand for paper and cardboard products. This has led to mixed paper price declines of approximately 80 percent from July 2017 to January 2018, while at the same time our operating costs are up as we have slowed sorting lines and increased labor to produce higher quality end products.”

He adds, “Our mature risk mitigation programs, such as the Sustainability Recycling Adjustment fee, have worked well to offset the majority of commodity price declines during the quarter, and we expect these programs to continue to significantly reduce our commodity risk exposure."

Net loss attributable to common stockholders was $21.8 million, or 52 cents per diluted common share, a decrease of $15 million for the fiscal year compared with net loss attributable to common stockholders of $6.8 million, or 17 cents per diluted common share, for fiscal 2016.

Adjusted net income attributable to common stockholders was $28.7 million, or 67 cents of adjusted diluted earnings per common share, for the fiscal year, compared with adjusted net income attributable to common stockholders of $7.8 million, or 19 cents of adjusted diluted earnings per common share, for fiscal 2016.

Operating loss was $12.6 million for the fiscal year, down $57.5 million from operating income of $44.9 million in fiscal 2016, whereas adjusted operating income was $52.8 million for the fiscal year, up $6.9 million from fiscal 2016.

"Our fiscal year 2018 budget is on track with the fiscal year 2021 strategic plan that we first introduced in August 2017 and reflects continued execution of our key strategies with the goal of driving additional shareholder value," Casella said. "We remain cautious about near-term headwinds from the recycling business; however, we believe that our mature risk mitigation programs will continue to offset the vast majority of commodity price declines and current market conditions are contemplated in our fiscal year 2018 guidance."

The company provided guidance for the fiscal year ending Dec. 31, 2018, by estimating results in the following ranges:

revenue between $618 million and $628 million (compared with $599.3 million in fiscal 2017);

adjusted EBITDA between $135 million and $139 million (compared with $129 million in fiscal 2017); and

normalized free cash flow of between $42 million and $46 million (compared with $38.8 million in fiscal 2017).

A number of assumptions are built into the company’s outlook:

Overall, Casella Waste says it expects revenue growth of between 4.6 percent and 6.3 percent in fiscal 2018. However, the company says it expects that the adoption of the new revenue recognition standard to lower revenue by approximately 1.5 percent. Given this change, Casella Waste expects revenue growth of between 3.1 percent and 4.8 percent in fiscal 2018.

In the solid waste business, it predicts revenue growth of between 6 percent and 7.5 percent, with price growth from 2.5 percent to 3.5 percent, volume growth from 0.5 percent to 1 percent, and 3 percent growth from acquisitions already completed.

In the Other segment, overall revenue growth of approximately 5 percent is expected, with growth in the industrial segment for the Customer Solutions group and higher volumes in the Organics group, the company says.

The budget includes the roll-over impact of acquisitions completed during fiscal 2017 and in early fiscal 2018 but does not include any acquisitions that have not yet been completed.

The company says it expects capital expenditures of approximately $65 million and payments on operating leases of approximately $7.5 million.

Casella Waste also assumes no material changes in the regional economy from the last 12 months.

The grants are used by local communities for programs to prevent and clean up unauthorized dumps; to aid in hiring local solid waste enforcement officers; for public education efforts on solid waste disposal and recycling; and to establish programs for the collection of white goods, bulky wastes and recyclables.

The recent recipients of the state’s solid waste planning or recycling grants include:

Northeast Mississippi Solid Waste Authority, Walnut, Mississippi: a solid waste planning grant of $36,000 that will be used for a solid waste management plan. The authority serves seven counties in the state.

Yazoo City, Mississippi: a $24,000 two-year waste tire grant to continue its local waste tire collection program for small quantity generators of waste tires. Funding for the tire grants is provided by a waste tire account funded from a fee charged on the wholesale sale of every new motor vehicle tire sold in the state.

Neshoba County: $22,800 that will be used by the county for a solid waste management plan.

Claiborne County: $38,344 that will be used for a solid waste enforcement officer and its cleanup program.

Warren County: $50,000 that will be used for a household hazardous waste collection event on June 16 and for illegal dumpsite cleanup.

Cities and counties in Mississippi may apply for Solid Waste Assistance Grants through the state’s DEQ.

Global Recycling Day is just two weeks away, and cities across the world are announcing their plans to participate in the inaugural event. The initiative from the Brussels-based Bureau of International Recycling (BIR) calls on the world to think of recycling in a new way.

March 18, 2018, in London, the Global Recycling Day team will showcase the scale of what is possible by using large bundles of recycled materials at a central location.

In France, the Federation of Recycling Enterprises (FEDEREC) will hold a press conference at World Wildlife Fund (WWF) France’s headquarters in Paris to raise awareness of the need to use the world’s Seventh Resource, which the day’s organizers have termed recyclables, Thursday, March 15.

Similar events are scheduled for Capitol Hill in Washington and in Sao Paolo for Global Recycling Day March 16.

In Johannesburg, a public cleanup campaign has been scheduled with the help of the Catholic Diocese and the city of Johannesburg.

At the head office of the Australian Packaging Covenant Organisation (APCO) in Sydney, more than 50 academics and industry experts will gather to recognize Global Recycling Day and discuss cross-sector collaborations. Both events are taking place ahead of the Global Recycling Day.

These events will encourage individuals to pledge to make at least one change to their recycling habits and ask them to sign BIR’s petition calling for the day to be recognized by the United Nations. To help the message spread and highlight the importance of a global approach to recycling to world leaders, Global Recycling Day T-shirts and Frisbees will be handed out at events across the world. The T-shirts are sustainably sourced and made from organic cotton and, in the spirit of the Day, the Frisbees are made from recycled plastic. The T-shirts and Frisbees can be recycled at the end of their lives.

On social media, the day’s supporters are encouraged to use #GlobalRecyclingDay and to adopt an exclusive Global Recycling Day border for their profile pictures. People also are being invited to share videos and images of recycling actions and celebrations. The aim is to showcase how central recycling is to our daily lives, the BIR says.

BIR President Ranjit Baxi says, “The world’s first Global Recycling Day is a vitally important new date in our global calendar. To truly harness the power of recycling, we must adopt a global approach to its collection, processing and use. It is time we put the planet first and all commit to spend 10 more minutes a day ensuring that materials are disposed of properly. It is a joint responsibility, not one of the few and I look forward to seeing individuals, communities, businesses and leaders joining us and celebrating the day on 18th March.

“Global Recycling Day is also a wakeup call to all of us, wherever we live. We must unite with those involved in the industry—from workers on waste mountains to the world’s largest businesses—to help them to make the best use of what we dispose of, to make recycling easier, inherent even in the design of products and to stop expecting countries to simply accept recyclables which are difficult and costly to process.”

BIR appoints two to chair positions

Brussels-based Bureau of International (BIR) President Ranjit Baxi has announced the appointment of chairs for the association’s Communications Committee and Convention Committee. The new positions take effect March 1, 2018.

Named to head BIR’s Communications Committee is Mark Sellier of OneSteel Recycling Hong Kong Ltd. He replaces Kamiel van Wijk. In announcing the appointment, Baxi says Sellier has been an active member of BIR for years and previously was chairman of BIR’s Convention Committee.

The Convention Committee will be chaired by Murat Bayram of European Metal Recycling Ltd. (EMR), who has been active on the BIR Non-Ferrous Metals Division board since November 2015. Bayram also is an active member of the German recycling federation VDM. In naming Bayram to the position, Baxi stressed the strategic importance of the Convention Committee, which helps determine future convention venues, formats and programs.

Trump tariff talk stirs markets

An announcement made by President Donald J. Trump Thursday afternoon (United States time), March 1, 2018, that he fully intends to impose tariffs on imported steel and aluminum greeted metals producers and traders in the rest of the world as they awoke on Friday morning, March 2.

Trump’s announcement was cited as the cause of a sell-off in the New York Stock Exchange and provoked numerous reactions and comments in North America and beyond. According to CBS News, the president “summoned steel and aluminum executives to the White House” March 1 and stated, “We'll be signing it next week,” regarding an executive order imposing new tariffs. Trump reportedly added, “You’ll have protection for a long time, in a while.”

One Hong Kong-based scrap trader, who requested anonymity, noted that while China is pointed to most frequently as the problem by campaigning politicians, an analysis he read “suggests that it may be Canada, Germany, Japan and South Korea, all close allies of the United States, who will suffer most.”

Reactions from Canada and Europe have been strong, but coverage of the tariffs by the China Daily, considered closely aligned with the Beijing government, indicates China was responsible for just 2 percent of the imported steel shipped into the U.S. in 2017.

Shanghai-based investor John Browning of BANDS Financial, who spoke at the May 2017 Bureau of International Recycling (BIR) World Recycling Convention in Hong Kong, observes in his daily dispatch to customers that “In the popular press this morning [in China], the Trumpian trade tariffs news was placed below ‘China, Tonga agree strategic partnership.’ This may reflect the fact that in China these tariffs may largely be a nonissue.”

Figures for 2017 published by the Washington-based American Iron and Steel Institute (AISI) show China shipped less finished and semifinished steel into the U.S. in 2017 than it did in 2016, and the 813,000 metric tons it shipped were surpassed by Brazil (987,000), Taiwan (1.2 million), Germany (1.4 million), Japan (1.5 million), Turkey (2.2 million) and South Korea (3.7 million).

Some industry observers do express concern that much of the steel recorded as coming from South Korea and Taiwan may be produced in China and is shipped via those two nations (and possibly via Canada) on its way to the U.S.

All those nations’ figures are topped by Canada, which in 2016 shipped more than 5.5 million metric tons of steel to the U.S.

The U.S. consumed about 6 million tons of aluminum in 2017, according to the U.S. Geological Survey (USGS), but produced just 740,000 tons of primary aluminum. “Even if they re-start idled lines, they could push it to about 1.5 million,” says Shah, who also is an officer with the Metal Recycling Association of India (MRAI). Adding that to the 3.7 million tons of secondary production, the U.S. would still be a net importer of finished or semi-finished aluminum.

“So, the U.S. has no alternative but to import, and in the process make consumers pay more for cars, cans, conductors, etc.,” states Shah. “It will create a handful of jobs (aluminum production is labor light), but it’s the American consumers who will have to foot a huge bill. I do understand that Mr. Trump wants to revive American manufacturing and create jobs. But my hope is [this] overzealousness does not end up making American consumers pay through their nose. The math is simply missing here.”

At least one China-based critic appeared in the form of the China Nonferrous Metals Industry Association (CNIA), which includes as an affiliate the Metals Recycling Branch (CMRA). CNIA VIce Chairman Wen Xianjun was quoted by Bloomberg as saying the U.S. measures “overturn the international trade order” and that “other countries, including China, will take relevant retaliatory measures.” Bloomberg also quoted a China Iron and Steel Association (CISA) officer as calling the move “stupid.”

The Hong Kong trader also questions the use of America’s Section 232 national security measure as a means of imposing the tariffs. “He’s using a national security investigation from last year and invoking a loophole in international trade rules allowing restrictions in times of war. Is he bringing in the measures for political gain to stimulate the domestic economy and U.S. labor market, or is he preparing for something more serious or just hedging both bets?”

He concludes, “Any way you look at it, if he signs off on the order, other countries will follow [with measures of their own].”

Also questioning the Section 232 approach has been Mexican steel industry association CANACERO, which has stated the proposed tariff “would affect various chains of production, attempting to [unwind] NAFTA’s (North American Free Trade Agreement's) integration objectives.”

In addition to the New York stock sell-off, on the Shanghai Futures Exchange on Friday morning, March 2, most aluminum contracts were trading higher, while copper and steel rebar pricing were moving lower.

Closer to home, Trump’s announcement was greeted with skepticism by several Republican Party elected officials in the U.S. According to CBS News, Sen. Orrin Hatch said the Trump advisors who pushed for the tariffs “ought to be reprimanded” because the new tariffs are “not going to help America.”

Sen. Ben Sasse of Nebraska, a Republican like both Trump and Hatch, called the move “leftist economic policy” when contacted by CBS, adding that the U.S. had “tried it a bunch of times over the last two centuries, and every time American families have suffered. It is bad policy.”

Exactly what will be included in the measure President Trump intends to sign the week of March 5-9 is not yet final. The U.S. Commerce Department has suggested different ways to impose tariffs on imported steel and aluminum, including tariffs of 24 percent on all steel and 7.7 percent on aluminum imports applied to all nations equally; or higher tariffs on 12 targeted countries, including Brazil, China, Russia, Hong Kong, Venezuela and Vietnam; or quotas limiting countries to either equal to or less than what they shipped in 2017.

The BBC and New York Times have reported the president is backing tariffs that will involve imported finished and semi-finished steel facing a 25 percent rate while aluminum will see a 10 percent tariff imposed. News outlets were unclear whether those tariffs will apply to all nations or only selected ones.

Leaders from around the world did not hesitate to question the decision. European Commission President Claude Juncker commented, “Protectionism cannot be the answer to our common problem in the steel sector. We will not sit idly. The EU Commission will bring forward in the next few days a proposal for World Trade Organization (WTO)-compatible countermeasures against the U.S. to rebalance the situation.”

“Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers,” Canadian Foreign Minister Chrystia Freeland was quoted as saying by political website The Hill. Regarding the use of Section 232 in the measure, she added, “It is entirely inappropriate to view any trade with Canada as a national security threat to the United States.”

The president of MillerCoors Brewing took to his Twitter account to say, “American workers and American consumers will suffer,” adding the company has been “selling an increasing amount of our beers in aluminum cans, and this action will cause aluminum prices to rise.”